“The federal funds rate will probably have to climb a little bit above neutral, because the unemployment rate is already -- from most people’s vantage points -- below a sustainable level of unemployment consistent with stable inflation,” Dudley told reporters Friday. “So, I think the move will be eventually to a slightly tight monetary policy.”

“I’m sort of expecting that the peak in the federal funds rate in this cycle will be lower than in past cycles, but I have quite a bit of uncertainty about that,” Dudley said during a conference call.

“The previous behavior of using housing debt to finance other kinds of consumption seems to have completely disappeared,” and people are leaving the wealth generated by rising home prices “locked up” in their homes.

“A return to a reasonable pattern of home equity extraction would be a positive development for retailers, and would provide a boost to economic growth.”

@Realist
I do tend to agree with lots of what you say as well. Skills based training from people who have actually been there, done that, in a setting remunerated by a somewhat free market; instead of, or at least in addition to, simply formal education and degrees, does look to be one of the keys to Germany’s outperformance compared to virtually all peers.

People are extremely flexible creatures, though. Incredibly attuned to take advantage of any opportunity that presents itself, if allowed to. Which is why, in addition to skills, education, safety nets, help and care; opportunity is also something that needs to be focused on.

And opportunity for those who currently have little to nothing, is the first thing to suffer, once societies starts becoming more concerned with all manners of contrived ways to guard and ringfence the status quo of privileges and property values of the already wealthy and powerful, than with the almost monomaniacal obsession with ensuring widespread access to unfettered opportunity, that illuminated the American revolution and westward expansion, which was likely mankind's so-far finest hour, as far as freedom for the average Joe was concerned.

Realist

Jun 16, 2018

Thanks for the reply Stuki. I agree with some of what you say. For instance, I am in the fortunate position of not having to work. I have all I need financially. Yet I continue to both work and also to volunteer my time, because it gives me a sense of purpose and accomplishment.
Part of what I do for charity is training unemployed people who lack the skills to get a job. These people “need” a job in order to have a better life. As technology advances at a faster pace, the job market is also changing at a faster pace. Any society that can train its workers to match the needs of its’ employers, will be a better society.

@Realist
Give the guy a few million, and watch him stop complaining about a lack of “jobs” overnight… People need/want the purchasing power to consume stuff. Not “a job.” What they complain about, is a lack of purchasing power. Nobody complains they aren’t allowed to work more hours at no added pay. While more pay for the same amount of work seem just a-ok for most everyone. Hence, obviously, what people want more of is pay. Not “a job” in and of itself.

The reason the two is often confused by those who absolutely refuse to think even a wink beyond popular fistpump slogans, is that most people do need to do something productive in return for pay. So they do need to work. But the only “policy goal” that corresponds with people’s actual revealed preferences, is to maximize the amount of pay people receive. Not whether they are classified as unemployed by the BLS or not. And maximizing their pay, requires maximizing the amount of output each worker is able to produce. Which means increasing the amount of capital available to him, as well as his skill at using the capital available. Not just being able to check of some box saying he is now arbitrarily classified as “employed” rather than “unemployed” based on meeting some made-up criteria.

Newton, Einstein, internal combustion engines and economics, were all invented prior to governments “meaningfully” interfering in the education of their kids and kin, that people have been doing since before they were even people.

The Soviet government ran an infinitely more impressive “education system” than the Hong Kong one for the duration of their existence. And had the Chess champions to show for it. And some hydrogen bombs. Even a nice stack of Nobels. But precious little else. Particularly in the way of welfare for it’s population. And you know why? Because of a lack of Laissez-Faire.

Mankind always puts “forth effort to fight the universe’s natural state of chaos.” No man can help doing so. But each man is only meaningfully able to put forth such effort to fight the chaos he experiences himself. There are no Dear Leaders putting forth effort to fight it on anyone else’s behalf. All pretending there is accomplishes, is allowing said Dear Leader to fight hos own particular chaos with resources stolen from others. Such that said others are now less able to fight the chaos they themselves experience. Cue “well educated” Soviet graduates of free (in many fields very highly regarded) state universities, vs illiterate Hong Kong textile traders.

The Invisible Hand that inevitably coordinates the “chaos fighting” undertaken by free men, OTOH, doesn’t steal. Nor impede in any other way, mankind’s (which is no more than a simple aggregate of all men’s) effort to fight chaos. Hence, the less Dear Leader, and the more Invisible Hand, the less stealing, and the more chaos fighting. For all but possibly Dear Leader himself, and his closest associates and hangers-on.

Ambrose_Bierce

Jun 16, 2018

He must assume that a higher unemployment rate will put pressure on wage inflation? I would assume that if very many people lost their jobs that government would put another bid under minimum wage. There is a study out that it takes a minimum wage worker three jobs to afford an apartment, so three of them go together and split the rent, but layoff one of them what have you got? the other two need a higher minimum wage.